The part that makes game engines both interesting and difficult is they made a series of discrete trade-offs to support the use cases of the types of games they ship. This is true from tooling workflows to rendering stacks to core engine layout like if they do heavy arena allocation or more open world dynamic entities.
We extended the engine we licensed with some fairly reasonable features and even doing the uplevel was a brutal, 4-6 month process to reconsile those changes.
I don't know enough about the implementation of C# and Swift to say for sure, but it does seem like the open sourcing of that would making it easier to do things like port some standard library component or algorithm over from one to the other, or perhaps do something like building a Swift implementation for the CLR.
There's a reason that they say performance is the most leaky abstraction.
I get what you are saying and it definitely applies to the core architecture of the product, but if you have a large number of customers each with their own needs then I would be surprised if there were zero parts of the product that were modular or interchangeable.
You'd be surprised. Game engines are extremely monolithic.
There are some modular components and techniques (eg pathfinding, rendering, physics engine), but most of the effort that goes into an engine like Godot is integrating these components to their specific architecture. While the component is transferable (eg you can always use the Bullet engine in your own project), the integration work isn't.
If their customers are also asking them for hosted Godot, maybe they should also offer that as another product offering, at a competitive price, and then use that as a sales funnel into their other products? That is usually the way it goes with these open source bits.
Anyway, I'm just saying that free software can be a competitor and that you can lose to it even if you can, technically, embed their source code. Even if software was perfectly composable that would be true, but it's even more possible given that you can't always just plug in any new features godot releases. They may even be implemented in different languages, for all we know.
Different languages actually isn't as bad an issue with this type of thing, as the idea with running it in the browser is that it all compiles down to Javascript or WASM.
Just to be clear, I'm not saying that they are incorrect in assessing that godot is not a threat. They seem to consider they have other features beyond godot's scope which is what differentiate them in the market. What I am saying is that free software can certainly be a threat to a business. In fact, it can be even a larger threat than a single competitor, because it can turn your product into a commodity.
To put it another way, if the actual problem to the business is that they are falling behind on feature velocity and don't have the head count to keep up, re-using some features from open source code could actually help there.
You may lose some costumers that only cared about it being web based and who are willing to learn another engine. Not only that, a single guy decides to host the game engine in the cloud and charge really cheap for it. Now, if you want to compete in price, you probably have to fire all your game engine devs and significantly downsize. Either that or have vastly superiour features to justify your higher price in the eyes of the costumers. All that threats your company's existence.
I'm not saying it's impossible to compete, but the more overlap between your product and a free software product, the bigger the threat will be.